'This Week' Transcript: Stephanie Cutter and Eric Fehrnstrom

Now, that report also showed areas that are still hurting, particularly teachers and construction workers. And that just shows the wisdom of the president's policies, because we have two very -- two policies sitting on the desk of Congress right now that they could act on to put teachers back to work and put construction workers back to work rebuilding our roads, bridges and highways.

STEPHANOPOULOS: Let's get Eric to respond to that. What do you make of that? Governor Romney's been quite critical of what the president did with the auto industry.

FEHRNSTROM: Well, I agree with Stephanie, first, that this president is not adding jobs fast enough. And I think for anybody who is urgently waiting for improvement in the economy, last week was not a good week. And it's not just the devastatingly weak jobs report we got on Friday. It was also the revision in GDP downward for the first quarter. It's a drop in consumer confidence. It was an increase in unemployment claims.

And it's not that we don't think that this president is trying. I think he is. It's just that his policies are not working. And, by the way, George, not just the policies...

STEPHANOPOULOS: On all of those?

FEHRNSTROM: Just let me stay on jobs for a moment. Not just that the policies -- we gave the keys to the largest economy in the world to a person who did not have any prior executive leadership experiences. Governor Romney has led in the private sector. He organized and ran the Winter Olympic Games in 2002. He's run a state successfully. I think that's a big difference between these two...

(CROSSTALK)

STEPHANOPOULOS: I want to get in more on the records in a moment, but let me turn it over to George Will now, because this comes at a point, this May jobs report, where perceptions usually get baked in, in a presidential race.

WILL: Exactly. And no matter what Congress does, nothing the government can do is going to change the trajectory of the economy right now. Since the Second World War, no president has been re-elected with the unemployment rate over 7.4 percent. What we learned this week is for sure it's going to be over 7.4 percent. We now have 40 consecutive months of 8 percent unemployment or more.

The average workweek went down. As you're right, they revised downward the first quarter GDP. They also revised downward the jobs creation in April. So there was simply nothing in this report to give people confidence.

And what it does begin to answer is a question. Is this going to be 1984 or 1980? 1984, when Reagan could run after a deep recession, on the morning in America and the revival has begun, or would it be 1980, with a sense of stagnation and permanence in stagnation, and it looks increasingly like 1980.

STEPHANOPOULOS: Let's get to the economist, then. Where is the economy right now?

KRUGMAN: Well, the economy is weak. It's not terrible, but it's weak. The bitter irony here has to be for Obama, certainly for people like me, is that if the Republican answer is "let's slash spending, let's have low taxes," that's actually the policy we've been following. It's amazing, actually. Especially if you look at the last couple of years, what we've actually seen is sharply...

(CROSSTALK)

STEPHANOPOULOS: Let me show you -- we have a chart in your blog this morning.

KRUGMAN: Yeah, this is...

STEPHANOPOULOS: We created it. It shows the point you're making.

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